When you invest in a new issue retail bond, also known as a fixed income new issue, you’re effectively lending money to a company in return for a fixed interest payment. Your investment is repaid on a specified end date.
New issue retail bonds launch on the Order book for Retail Bonds (ORB) through the London Stock Exchange (LSE). They’re usually considered lower risk than investing in the shares of the company. If a company is wound up, bondholders are paid before shareholders, so there is less chance of losing your money.
However, if the issuer of the retail bond fails to meet their obligations, you may get back less than is due to you and your investment is not covered by a financial compensation scheme.